Forms of Business Entities

Select the options that are a form of business entity.

• Sole proprietorship

• Partnership

• Private Limited Company

• Public Company

Owners of a private limited company are called _______.

• No special name for them

• Shareholders

• Stockholders

Answer explanation

Shareholder(s) buy units of a company, contributing funds (capital) as investment in the company.

Sole proprietorships have _____ owner(s).

• one

• at least two

• a minimum of 50

• a maximum of 50

Answer explanation

Sole Proprietorship: 1 owner

Partnership: at least 2 owners, both contribute capital

Company: Private limited companies have a maximum of 50 shareholders. Public companies have more than 50 shareholders.

What is one difference between a private limited company and a (public) limited company?

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Answer explanation

Number of shareholders

- Private limited company: max 50

- Limited company: no limit

How shares are bought and sold

- Private limited company: private transfers

- Limited company: bought and sold on exchanges like Singapore Stock Exchange, New York Stock Exchange etc

Which business form will find it the easiest to borrow money from a bank?

(more than 1 correct answer)

• Sole proprietorship

• Limited liability partnership

• Private limited company

Answer explanation

"Owner(s) need to pay all debts and losses.

Owner(s) also enjoys all profits and rewards arising

from the business."

Which business form does this statement best describe?

• Sole proprietorship

• Limited liability partnership

• Private limited company

Answer explanation

"Control of the business is shared between the owners. They may hire professionals to help them run the business."

Which business form does this statement best describe?

• Sole Proprietorship

• Limited Liability Partnership

• Private Limited Company

Answer explanation

Kongo Gumi (1444 years old) is the oldest business in the world. It is a construction business which specialises in constructing buddist temples.

Make a guess which business form Kongo Gumi operates as.

• Sole Proprietorship

• Limited Liability Partnership

• Private Limited Company

Answer explanation

https://tinyurl.com/oldestbiz

It is the easiest to transfer ownership of the business if it operates as a private limited company.

• True

• False

Answer explanation

Both sole proprietorships and limited companies have ease of ownership transfers.

If the business operates as a public limited company, the transfer is even easier - owner simply sells his shares on the stock exchange.

Ms Lim wants to start a business to sell my baked goods. But I don't want to have to comply with lots of laws and regulations.

Which business form(s) is/are the most suitable for me?

• Sole Proprietorship

• Limited Liability Partnership

• Private Limited Company

Answer explanation